"Small opportunities are often the beginning of great enterprises."
- Demosthenes
Hard Money Loans
Residental A residential hard money loan is a kind of loan in which a borrower gets funds based on the value of a specific residential real estate. The term hard money refers to the difficulties in acquiring a loan. Hard money loans offer higher interest rates and lower loan-to-value ratios, as there is no government institution that backs the lender. The loans are given against the value of real estate collateral. Residential hard money loans are loans given by private lenders on the basis of the value of the asset or property as opposed to the traditional banking criteria of credit scores, tax returns, and income statements of the borrower. Residential hard-money loans are temporary bridge loans that are provided for acquisitions, refinancing, foreclosures and people who have file bankruptcy. The interest rates for these loans are higher, but is cheaper than taking on a financial partner or filing for bankruptcy. In general, hard money loans offer interest rates and points that are 50-100% higher than traditional bank loans. However, hard money loans are considered to be beneficial for people looking for sources to help them get loans, for example, to renovate residential property before selling or renting it. The hard money lenders usually consider owner occupied as well as income-producing properties such as apartments, condos and single family residental properties.
Commercial A commercial hard money loan is a kind of loan in which a borrower or borrowers gets funds based on the value of a specific commercial real estate. The term hard money refers to the difficulties in acquiring a loan. Hard money loans offer higher interest rates and lower loan-to-value ratios, as there is no government institution that backs the lender. The hard money lenders usually consider income-producing properties such as multi family, mixed use, retail or shopping centers, industrial, office buildings, hotels, motels, self storage, warehouse, automotive, medical institutions, and owner occupied bars and restaurants. They also provide loans for non-income producing activities such as land acquisition, development and construction, bank workouts, foreclosures and bankruptcies. Most private investors look for a safe and secure investment with a return that is better than what they will receive from the bank. As commercial hard money loans are secured by a property with usually up to 60% - 70%, the investor is well protected and receives the benefit of the higher interest rate return.
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